Question

Monthly Payments and Finance Charges. Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $4,800, with no down payment required. Make the following calculations: (a) What is the amount of the monthly payment if she borrowed for four years?b.What are the total finance charges over that four-year period? Round your answer to the nearest dollar.
c.How would the payment change if Kimberly reduced the loan term to three years? Round your answer to the nearest cent.
A(n) increase/decrease of $ compared to the 4-year loan.
d.What are the total finance charges over that three-year period? Round your answer to the nearest dollar.
$
e.How would the payment change if she could afford a down payment of $600 with four years of financing? Round your answer to the nearest cent.
A(n) increase/decrease of $ compared to the $4,900, 4-year loan.

What are the total finance charges over that four-year period given the $600 down payment? Round your answer to the nearest dollar.

$

Answer 1

Answer:

We can use a loan calculator to answer this:

• principal $4,800
• APR = 16%
• n = 4 years or 48 months

A) monthly payment $136.03

B) total finance charges $1,729.60

• if n = 3 years or 36 months

C) monthly payment $168.75, higher than the 4 year loan

D) total finance charges $1,275.14

• if she could put a $600 down payment, then the principal = $4,200

E) monthly payment $119.03, lower than the $4,800 4 year loan

F) total finance charges $1,513.40